How We're Unique

Risk Controlled Model Portfolios

Our risk-controlled model investment portfolios have been designed to meet the varying objectives of investors who want to earn attractive returns and preserve capital during turbulent markets.

Our model portfolios below show how we typically diversify our investment portfolios among several investment strategies for various risk levels. The Investment strategies are designated as either "core" or "trend" strategies. Core strategies are managed using a traditional long term approach, regardless of market cycles. Trend strategies apply trend following methods in order to reduce market exposure during down trends.

1. Conservative

Estimated average annual return: 7.5%

Potential bear market decline of 5%

Downside risk similar to 30/50/20 Blended Index

Asset Class	Investment Strategy	Pct.
Cash Equiv	Core - Money Market	2%
Bonds	Core - High Quality Bonds	20%
	Core - Trust Deeds	10%
	Trend - High Yield Bond	28%
Real Estate	Core - REITs or Apt Bldgs	10%
Stocks	Core - Dividend Inc Stocks	20%
	Trend - Global ETFs	10%

2. Moderate

Estimated average annual return: 8.0%

Potential bear market decline of 6%

Downside risk similar to 35/55/10 Blended Index

Asset Class	Investment Strategy	Pct.
Cash Equiv	Core - Money Market	2%
Bonds	Core - High Quality Bonds	10%
	Core - Trust Deeds	10%
	Trend - High Yield Bond	28%
Real Estate	Core - REITs or Apt Bldgs	10%
Stocks	Core - Dividend Inc Stocks	15%
	Trend - Large Cap Stocks	10%
	Trend - Global ETFs	15%

3. Balanced

Estimated average annual return: 8.5%

Potential bear market decline of 8%

Downside risk similar to 40/50/10 Blended Index

Asset Class	Investment Strategy	Pct.
Cash Equiv	Core - Money Market	2%
Bonds	Core - Trust Deeds	10%
	Trend - High Yield Bond	28%
Real Estate	Core - REITs or Apt Bldgs	10%
Stocks	Core - Dividend Inc Stocks	15%
	Trend - Large Cap Stocks	15%
	Trend - Mid Cap Stocks	5%
	Trend - Global ETFs	15%

4. Growth & Income

Estimated average annual return: 9.0%

Potential bear market decline of 10%

Downside risk similar to 45/55/10 Blended Index

Asset Class	Investment Strategy	Pct.
Cash Equiv	Core - Money Market	2%
Bonds	Core - Trust Deeds	10%
	Trend - High Yield Bond	18%
Real Estate	Core - REITs or Apt Bldgs	10%
Stocks	Core - Dividend Inc Stocks	15%
	Trend - Large Cap Stocks	18%
	Trend - Mid Cap Stocks	7%
	Trend - Global ETFs	20%

5. Diversified Growth

Estimated average annual return: 9.5%

Potential bear market decline of 12%

Downside risk similar to 50/50/0 Blended Index

Asset Class	Investment Strategy	Pct.
Cash Equiv	Core - Money Market	1%
Bonds	Trend - High Yield Bond	9%
	Core - Trust Deeds	10%
Real Estate	Core - REITs or Apt Bldgs	10%
Stocks	Core - Dividend Inc Stocks	15%
	Trend - Large Cap Stocks	20%
	Trend - Mid Cap Stocks	10%
	Trend - Global ETFs	25%

Estimated average annual returns for the Risk Controlled Model Portfolios above are provided for long term financial planning purposes. These estimates are based on current market and economic conditions and are subject to change.

Risk levels are considered to be potential bear market declines (i.e., draw-down) that occur about 1 year in 10. These estimates are based on a 30% decline in the S&P 500 over a 12 month period.

Each model portfolio has comparable downside risk (during a bear market) to the blended indices consisting of S&P 500 Composite Index, the Lehman Brothers Aggregate Bond Index, and the Citigroup 3 Month T-Bill index in the ratios given.

Definition of Terms

To assist you in understanding our investment approach and how we might design a diversified portfolio, we have described our investment terms below.

Investment Portfolio: This is an investor's entire investment portfolio not including home, personal property, and liquid funds needed for living expenses and emergencies.

This would include brokerage accounts, IRAs, annuities, rental property and company retirement plans such as 401(k)s.

This portfolio would be tailored to meet an an investors objectives, and regularly monitored and adjusted order to control risk.

Model Portfolios:

These are hypothetical portfolios that are diversified among multiple investment strategies according to their specified target allocations. These models are provided for illustrative purposes to aid in the investment planning process.

Asset Allocation: This refers to the division of the investment portfolio into the most basic or general types of investment assets (called asset classes). This diversification is the most important factor in determining the overall behavior of the portfolio.

Investment Strategies:

The investment strategies are the building blocks of a risk-controlled portfolio. Each investment strategy is managed according to specified management style or approach. These investment strategies may hold individual securities. mutual funds, real estate, or trust deeds.

Core and Trend:

The terms "core" and "trend" are used to distinguish between two very different investment approaches or styles.

The "core" investment strategies are long-term in nature and tend to stay fully invested throughout a full market cycle, regardless of market trends.

The "trend" investment strategies follow a market-timed investment style. This investment style will normally be 80-100% invested in it's particular type of securities. However, during downtrends, this strategy will attempt to reduce its downside risk by switching into a money market fund and/or by applying a hedge position in order to create a market neutral position.

Bear Market Decline

This term is used to illustrate how large of a draw-down or decline in value a model portfolio may experience in a severe bear market. This is intended solely for investment planning purposes.

Blended Index

This term is used to compare the expected downside risk of a model portfolio with that of a comparable traditional portfolio of stocks, bonds, and cash. This is intended solely for investment planning purposes.

Exchange Traded Funds (ETFs): These are index funds or trusts that are listed on an exchange and can be traded intraday. ETFs are designed to generally replicate the holdings and correspond to the performance and yield of their underlying index.